Engage Cuts 100 Jobs, Seeks Buyer For Media UnitEngage Cuts 100 Jobs, Seeks Buyer For Media Unit

Interactive marketing software company Engage Inc. is throwing in the towel on its media business. The company hopes to sell its media arm, which targets and serves online ads across the Internet and provides analytics on the effectiveness of advertising. Engage CEO Tony Nuzzo said in a statement Monday that the continuing decline of the advertising industry made the media unit a burden that was detracting from the success of the company's content-management software business, which is aimed at helping marketers create consistent advertising copy across all channels.

The slumping advertising market may be to blame. Engage rival DoubleClick Inc. has struggled to reach profitability. Last quarter, the company lost $10.5 million and revenue dropped 20% from last year. Still, DoubleClick has pursued an aggressive acquisition strategy designed to make it an all-around interactive advertising technology and services vendor that analysts say will have long-term payoffs, if the company can survive the economic downturn.

But Jim Nail, a senior analyst at Forrester Research, says the real problem was caused by Engage's trying to straddle the fence between the media business and the software business, until last week, when its parent holding company, CMGI Inc., said it wouldn't provide another cash injection. Yet Nail says selling a struggling media business during a slow economy isn't an obviously logical plan because there's no incentive for any buyers, especially considering Engage's decision not to sell any of its consumer Web-surfing profiles. "That leaves them with software and intellectual property," Nail says. Those are things that anyone in the business will already have, and it's doubtful that there will be any newcomers to the online advertising industry.

Engage cut 100 jobs Monday from its media division, and 125 more employees were notified that they'll be let go if the company cannot find a buyer. Engage will provide financial guidance on the realigned company when it releases its fourth-quarter earnings report in September.